Morgan Stanley with its weekly trading recommendation

Consider selling USD/JPY on further rallies this week, advises Morgan Stanley in its weekly FX pick to clients.

"Japan's GPIF said there was no need to make any changes to the portfolio as the fund is achieving its target returns which should allow USDJPY to remain supported earlier this week. However, our STGRDI has crossed 2 on Friday suggesting equity markets may soon start loosening upward momentum.

According to the'People's Daily' China will not reverse its efforts to implement market-oriented reforms of the yuan and the currency will remain in a strong position as the country's long-term economic fundamentals are stable.

USDCNY is now at risk breaking its January 6.5962 high. A break beyond this level could spark speculation China loosing currency reserves again not boding well for the global risk outlook and implicitly for USDJPY," MS says as a rationale behind this call.

Morgan Stanley analysts placed a sell order at 112.40 with a target of 105.00 and a stop at 114.30. Spot is at 110.76.

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